Fees for many products in the financial sector remain too high. High costs in savings products undermine the national objective of getting our people to save more. The financial industry must take more urgent steps to reduce costs and introduce more appropriate and transparent saving and investment products, including annuities. There is also much to be done to improve market conduct practices in the financial sector. The “Treating Customers Fairly” initiative will be accelerated to protect customers more vigorously
Pravin Gordon, Budget speech 2012/2013
Is it time to go paperless? Records management – The cost of warehousing bad habits
Financial service providers generally incur significant costs within the end-to-end value chain of their records management system. From the point of origination of a record, until the point of warehousing and destruction, financial service providers incur costs. These costs are often accepted as “business as usual” as records are required to maintain customer data and ensure effective governance and regulatory compliance. Reducing the associated costs across the value chain is often overlooked as an efficiency opportunity.
An analysis at a large retail bank has proven that by streamlining process and adding technology to eliminate paper from the process, operating expenses in the processing divisions can be reduced by as much as 25% (a reduction of between 60% and 70% of records management associated costs).
Given increased regulations, financial service providers will increasingly need to ensure that their record management is run more effectively. They will increasingly need to be more transparent and be able to provide effective reporting to regulators and management regarding their financial stability. They will also need to manage and report on information regarding customers more often and more effectively, in line with Treating Customers Fairly (TCF) compliance standards, the Protection of Personal Information Bill (POPI) and the Consumer Protection Act (CPA) regulations.
Lost or damaged records contribute to a poor brand image amongst customers. Customers get contacted by financial institutions to provide their particulars and various documents, generally more than once, in order to ensure compliance with Financial Intelligence Centre Act (FICA) requirements.
Financial service providers, including both banks and insurers, often do not realise the amount of unnecessary duplication that takes place, especially where copies of information have already been obtained from clients during prior interactions. The cost of this is compounded by many financial service providers that take a conservative approach and keep too many records for longer than required. Keeping unnecessary documents is costly, time consuming and a waste of corporate office and storage space.
Technology has created the opportunity for improved alternatives to the traditional method of physical record management. It has the potential to be applied throughout the full value chain. This transformation journey (depending on organisational readiness and investment) can range from 12 to 36 months.
The question then can be asked: “why is digital records management not deployed throughout all financial service providers?”
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